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Money a jury gives to a party in a lawsuit to compensate for some injury. Damages may be divided into actual damages, which compensate for a real loss (such as the cost of repairing a car), and punitive damages, which penalize the other party. For example, a jury may require a defendant to pay $30,000 in actual damages to pay for the plaintiff's medical bills, and a further $100,000 to show how displeased the jury is with the defendant's actions.


money awarded by a court to a plaintiff who has suffered loss at the hands of the defendant as a result of breach of CONTRACT or a TORT committed by the defendant.


Compensation for an injury for which the law provides a remedy. Following are highlights of some of the law of damages as it relates to real property:

• The measure of damages to property is the difference in the value of the thing before the injury and after the injury. The cost to make repairs is usually not a valid measure of damages.

• Parties may not contractually agree to a penalty for default, such as late completion of a construction project. Penalties are illegal. Parties may, however, agree that the damages for default will be difficult to measure exactly, so they will agree to liquidated damages in a certain agreed-upon amount. This is the reasoning behind contracts that allow retention of the earnest money if the buyer defaults.

• In breach of contract cases, injured parties are required to take such actions as are reasonable to minimize their damages and will be denied any damages at all if they do not take such mitigation steps. If a tenant breaches a lease, the landlord must try to release the premises to another, and the value of any damages will be diminished by the value of the new lease.

• Consequential damages, which are damages not as a direct result of the wrong, but flowing from some of the consequences of the wrong, are recoverable only if the wrongdoer had some reason to know of the consequences. A person who allows something unsafe to remain on the premises (such as a wet floor) may be responsible for the injury to a guest who slips and falls. However, the person may not be liable for the consequential damages when the guest becomes addicted to pain medication.

• Punitive damages are intended to punish the wrongdoer and deter future similar conduct. Because of the preponderance of multimillion-dollar punitive damage jury verdicts in recent years, the United States Supreme Court has recently held that excessive punitive damages are a violation of the “cruel and unusual punishment” clause of the Constitution, and so may be reviewed in the federal court system and set aside even though the original lawsuit was brought in a state court system.

• Treble damages are allowed under many federal statutes rather than allowing the jury to calculate punitive damages.

• Damages received for personal bodily injury are not income and not taxable; other types of damages may be taxable depending on what they represent.

• Damages are recoverable for emotional distress. The addition of a claim for emotional dis- tress is often enough to trigger an insurance company defense of a lawsuit. Although there may not be insurance coverage for an award, it will pay for the lawyers.

References in periodicals archive ?
The ruling also states that the section 104(a)(2) exclusion applies to backpay and other compensating damages received in connection with claims brought under 42 U.
The case went to trial, and the plaintiff was awarded $60,000 in damages.
If damage awards will trigger the AMT, it may be possible to mitigate the impact by deferring the payment of any state and local taxes related to the damages into the next tax year.
Nearly 2,000 of Church Mutual's insureds suffered damage.
The researchers hypothesize that fish with gill DNA damage might also have damage to DNA in other parts of the body.
An allocation in a settlement agreement has a much better chance of being upheld on review if it is negotiated in good faith and at arm's length; (19) the IRS and the courts are much less likely to recognize settlement agreement allocations if the recipient has complete discretion over how the damage payments are allocated.
Cerami reports that high doses of EPO injected into the rats' bloodstream guards the animals against brain damage caused by temporarily obstructing the blood vessels in the brain.
The first tier limits punitive damages to $1 million or three times the amount of compensatory damages, whichever is greater, in cases where an employer participated in the wrongful conduct, condoned or ratified the conduct, or if the employer engaged in gross negligence that contributed to the injury.
A typical example of property damage is a construction defect claim in which a structure is damaged over a prolonged period of time due to poor soil condition and subsidence.
One such exclusion provided by IRC section 104(a)(2) is for damages received on account of physical injuries.